Pacific Investment Management, which oversees more than $1.6 trillion of assets, has built up an above-average cash position firm-wide and has held S&P put options as geopolitical and military risks mount, Dan Ivascyn, group chief investment officer at Pimco, said on Friday.
President Donald Trump issued a new threat to North Korea on Friday, saying what he called U.S. military solutions were “locked and loaded” as Pyongyang accused him of driving the Korean peninsula to the brink of nuclear war.
Ivascyn said Pimco has been taking profits in high-valued corporate credits and built cash balances for when better opportunities arise.
Pimco has also been a holder of put options on the Standard & Poors 500 as the CBOE Volatility Index, better known as the VIX and the most widely followed barometer of expected near-term stock market volatility, remains historically low.
We’re getting liquidity higher, Ivascyn said in a phone interview. If we see actual military altercation, markets can go a lot lower. And at the same time, volatility has been so low for so long that it doesn’t take much for markets to get worked up.”
Though the market has yet to panic, you will certainly see panic if all of this turns into a sustained military encounter, he added.
Ivascyn also oversees the Pimco Income Fund, which attracted inflows of $2.65 billion in July, bringing the fund’s total net assets to $92 billion, Morningstar data showed on Thursday.
Pimco is owned by German insurer Allianz SE.
Source: Investment Cnbc
Pimco's Ivascyn says firm has built 'above average' cash position